BILL NUMBER: AB 844	CHAPTERED  10/10/99

	CHAPTER   842
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 8, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 9, 1999
	AMENDED IN SENATE   SEPTEMBER 7, 1999
	AMENDED IN SENATE   JUNE 7, 1999
	AMENDED IN ASSEMBLY   APRIL 26, 1999

INTRODUCED BY   Assembly Member Thomson
   (Coauthor:  Assembly Member Strom-Martin)
   (Coauthors:  Senators Escutia and Solis)

                        FEBRUARY 24, 1999

   An act to amend Sections 15438 and 15439 of the Government Code,
relating to health, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 844, Thomson.  California Health Facilities Financing
Authority:  loans.
   Under existing law, there is a California Health Facilities
Financing Authority which is empowered to make loans under certain
conditions from the continuously appropriated California Health
Facilities Financing Fund to nonprofit corporations or associations
for financing or refinancing of the acquisition, construction, or
remodeling of health facilities, as defined, including hospitals.
   This bill would, out of moneys in the California Health Facilities
Financing Fund, authorize the authority to make loans to, or
purchase loans of, any participating health institution either in
connection with the financing of a project or working capital or for
the refinancing of indebtedness incurred by that participating health
institution.
   Because the bill would expand the purposes for which a
continuously appropriated fund may be used, the bill would constitute
an appropriation.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 15438 of the Government Code is amended to
read:
   15438.  Subject to the conditions, restrictions, and limitations
of Section 15438.1, the authority may do any of the following:
   (a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
   (b) Adopt an official seal.
   (c) Sue and be sued in its own name.
   (d) Receive and accept from any agency of the United States or any
agency of the State of California or any municipality, county or
other political subdivision thereof, or from any individual,
association, or corporation gifts, grants, or donations of moneys for
achieving any of the purposes of this chapter.
   (e) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this part.
   (f) Determine the location and character of any project to be
financed under this part, and to acquire, construct, enlarge,
remodel, renovate, alter, improve, furnish, equip, fund, finance,
own, maintain, manage, repair, operate, lease as lessee or lessor and
regulate the same, to enter into contracts for any or all of those
purposes, to enter into contracts for the management and operation of
a project or other health facilities owned by the authority, and to
designate a participating health institution as its agent to
determine the location and character of a project undertaken by that
participating health institution under this chapter and as the agent
of the authority, to acquire, construct, enlarge, remodel, renovate,
alter, improve, furnish, equip, own, maintain, manage, repair,
operate, lease as lessee or lessor and regulate the same, and as the
agent of the authority, to enter into contracts for any or all of
those purposes, including contracts for the management and operation
of that project or other health facilities owned by the authority.
   (g) Acquire, directly or by and through a participating health
institution as its agent, by purchase solely from funds provided
under the authority of this part, or by gift or devise, and to sell,
by installment sale or otherwise, any lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and
other interests in lands, including lands lying under water and
riparian rights, which are located within the state the authority
determines necessary or convenient for the acquisition, construction,
or financing of a health facility or the acquisition, construction,
financing, or operation of a project, upon the terms and at the
prices considered by the authority to be reasonable and which can be
agreed upon between the authority and the owner thereof, and to take
title thereto in the name of the authority or in the name of a
participating health institution as its agent.
   (h) Receive and accept from any source loans, contributions, or
grants for, or in aid of, the construction, financing, or refinancing
of a project or any portion of a project in money, property, labor,
or other things of value.
   (i) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
connection with the financing of a project or working capital in
accordance with an agreement between the authority and the
participating health institution.  However, no loan to finance a
project shall exceed the total cost of the project, as determined by
the participating health institution and approved by the authority.
Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (j) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
accordance with an agreement between the authority and the
participating health institution to refinance indebtedness incurred
by that participating health institution in connection with projects
undertaken or for health facilities acquired or for working capital
financed prior to or after January 1, 1980.  Funds for secured loans
may be provided from the California Health Facilities Financing Fund
pursuant to subdivision (b) of Section 15439 to small or rural health
facilities pursuant to authority guidelines.
   (k) Mortgage all or any portion of interest of the authority in a
project or other health facilities and the property on which that
project or other health facilities are located, whether owned or
thereafter acquired, including the granting of a security interest in
any property, tangible or intangible, and to assign or pledge all or
any portion of the interests of the authority in mortgages, deeds of
trust, indentures of mortgage or trust or similar instruments,
notes, and security interests in property, tangible or intangible, of
participating health institutions to which the authority has made
loans, and the revenues therefrom, including payments or income from
any thereof owned or held by the authority, for the benefit of the
holders of bonds issued to finance the project or health facilities
or issued to refund or refinance outstanding indebtedness of
participating health institutions as permitted by this part.
   (l) Lease to a participating health institution the project being
financed or other health facilities conveyed to the authority in
connection with that financing, upon the terms and conditions the
authority determines proper, and to charge and collect rents therefor
and to terminate the lease upon the failure of the lessee to comply
with any of the obligations of the lease; and to include in that
lease, if desired, provisions granting the lessee options to renew
the term of the lease for the period or periods and at the rent, as
determined by the authority, to purchase any or all of the health
facilities or that upon payment of all of the indebtedness incurred
by the authority for the financing of that project or health
facilities or for refunding outstanding indebtedness of a
participating health institution, then the authority may convey any
or all of the project or the other health facilities to the lessee or
lessees thereof with or without consideration.
   (m) Charge and equitably apportion among participating health
institutions, the administrative costs and expenses incurred by the
authority in the exercise of the powers and duties conferred by this
part.
   (n) Obtain, or aid in obtaining, from any department or agency of
the United States or of the State of California or any private
company, any insurance or guarantee as to, or of, or for the payment
or repayment of, interest or principal, or both, or any part thereof,
on any loan, lease, or obligation, or any instrument evidencing or
securing the loan, lease, or obligation, made or entered into
pursuant to this part; and notwithstanding any other provisions of
this part, to enter into any agreement, contract, or any other
instrument whatsoever with respect to that insurance or guarantee, to
accept payment in the manner and form as provided therein in the
event of default by a participating health institution, and to assign
that insurance or guarantee as security for the authority's bonds.
   (o) Enter into any and all agreements or contracts, including
agreements for liquidity and credit enhancement, interest rate swaps
or hedges, execute any and all instruments, and do and perform any
and all acts or things necessary, convenient, or desirable for the
purposes of the authority or to carry out any power expressly granted
by this part.
   (p) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, at the
discretion of the authority, in any obligations authorized by the
resolution authorizing the issuance of the bonds secured thereof or
authorized by law for the investment of trust funds in the custody of
the Treasurer.
   (q) Establish and maintain a reciprocal insurance company or an
insurance program that shall be treated and licensed as a reciprocal
insurance company for regulatory purposes under the Insurance Code on
behalf of one or more participating health institutions, to provide
for payment of judgments, settlement of claims, expense, loss and
damage that arises, or is claimed to have arisen, from any act or
omission of, or attributable to, the participating health institution
or any nonprofit organization controlled by, or controlling or under
common control with, the participating health institution, their
employees, agents or others for whom they may be held responsible, in
connection with any liability insurance (including medical
malpractice); set premiums, ascertain loss experience and expenses
and determine credits, refunds, and assessments; and establish limits
and terms of coverage; and engage any expert or consultant it deems
necessary or appropriate to manage or otherwise assist with the
insurance company or program; and pay any expenses in connection
therewith; and contract with the participating health institution or
institutions for insurance coverage from the insurance company or
program and for the payment of any expenses in connection therewith
including any bonds issued to fund or finance the insurance company
or program.
   (r) Provide funding for self-insurance for participating health
institutions.  However, there shall be no pooling of liability risk
among participating health institutions except as provided in
subdivision (f) of Section 15438.5.
   (s) (1) Make grants-in-aid to any participating small or rural
hospital, as defined in Section 124840 of the Health and Safety Code,
in connection with the financing of a project or for working capital
in accordance with an agreement between the authority and the
hospital.  However, no grant to finance a project shall exceed the
total cost of the project, as determined by the hospital and approved
by the authority.
   (2) Make grants-in-aid to any small or rural hospital, as defined
in Section 124840 of the Health and Safety Code, in accordance with
an agreement between the authority and the hospital to discharge
indebtedness incurred by the hospital in connection with projects
undertaken, for health facilities acquired, or for working capital
financed prior to the effective date of this subdivision.
   (3) Grants shall be made pursuant to this subdivision only from
HELP Program funds, not to exceed eight hundred seventy thousand
dollars ($870,000).  In consultation with representatives of the
hospital industry and other affected parties, the authority shall
develop a process and criteria for making grants under this
subdivision, including obtaining legal opinions on appropriateness of
grants to private facilities for capital outlay purposes.
  SEC. 2.  Section 15439 of the Government Code is amended to read:
   15439.  (a) The California Health Facilities Authority Fund is
continued in existence in the State Treasury as the California Health
Facilities Financing Authority Fund.  All money in the fund is
hereby continuously appropriated to the authority for carrying out
the purposes of this division.  The authority may pledge any or all
of the moneys in the fund as security for payment of the principal
of, and interest on, any particular issuance of bonds issued pursuant
to this part, and, for that purpose or as necessary or convenient to
the accomplishment of any other purpose of the authority, may divide
the fund into separate accounts.  All moneys accruing to the
authority pursuant to this part from whatever source shall be
deposited in the fund.
   (b) Subject to the priorities which may be created by the pledge
of particular moneys in the fund to secure any issuance of bonds of
the authority, and subject further to the cost of loans provided by
the authority pursuant to subdivisions (i) and (j) of Section 15438,
and subject further to any reasonable costs which may be incurred by
the authority in administering the program authorized by this
division, all moneys in the fund derived from any source shall be
held in trust for the security and payment of bonds of the authority
and shall not be used or pledged for any other purpose so long as
such bonds are outstanding and unpaid.  However, nothing in this
section shall limit the power of the authority to make loans with the
proceeds of bonds in accordance with the terms of the resolution
authorizing the same.
   (c) Pursuant to any agreements with the holders of particular
bonds pledging any particular assets, revenues, or moneys, the
authority may create separate accounts in the fund to manage assets,
revenues, or moneys in the manner set forth in the agreements.
   (d) The authority may, from time to time, direct the State
Treasurer to invest moneys in the fund which are not required for its
current needs, including proceeds from the sale of any bonds, in the
eligible securities specified in Section 16430 as the agency shall
designate.  The authority may direct the State Treasurer to deposit
moneys in interest-bearing accounts in state or national banks or
other financial institutions having principal offices in this state.
The authority may alternatively require the transfer of moneys in
the fund to the Surplus Money Investment Fund for investment pursuant
to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2
of Division 4.  All interest or other increment resulting from an
investment or deposit shall be deposited in the fund, notwithstanding
Section 16305.7.  Moneys in the fund shall not be subject to
transfer to any other fund pursuant to any provision of Part 2
(commencing with Section 16300) of Division 4, excepting the Surplus
Money Investment Fund.
   (e) All moneys accruing to the authority from whatever source
shall be deposited in the fund.
